Transactions valued in excess of $445.5 million (up from $403.9 million) will be subject to filing requirements absent exemption, regardless of whether the size-of-persons test is met.
On January 23, 2023, the Federal Trade Commission (FTC) announced increases to the jurisdictional thresholds for premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). The FTC adjusts the thresholds annually, consistent with changes to the gross national product. The announced changes will become effective for filings made or transactions closing 30 days after publication of the revised thresholds in the Federal Register.
Pursuant to the revised thresholds, transactions valued in excess of $111.4 million (up from $101 million) are reportable under the HSR Act, absent exemption, if the “size-of-persons” test is met. In most transactions, the size-of-persons test is met if one “person” in a transaction has total assets or annual sales of $222.7 million or more (up from $202 million) and another “person” in the transaction has total assets or annual sales of $22.3 million or more (up from $20.2 million). A “person” includes an acquired or acquiring entity, its ultimate parent entity and all entities controlled by the ultimate parent entity. Transactions valued in excess of $445.5 million (up from $403.9 million) will be subject to filing requirements absent exemption, regardless of whether the size-of-persons test is met.
HSR Act Penalties Increase
Earlier in the month, the FTC separately announced that the maximum civil penalty amount for violations of the HSR Act will increase from $46,517 to $50,120 per day effective January 11, 2023, the date of publication in the Federal Register. The new penalty levels apply to civil penalties assessed after the effective date of the adjustment, including civil penalties whose associated violations predated the effective date.
Revised Fee Structure
In addition, the revised fee structure pursuant to the Consolidated Appropriations Act signed into law on December 29, 2022, will also take effect 30 days after publication of a second notice approved January 23, 2023, in the Federal Register. Transactions valued below $161.5 million will be subject to a $30,000 filing fee (down from $45,000), whereas transactions valued at or above $5 billion will be subject to a $2.25 million filing fee (up from $280,000). The new fee structure includes six tiers, instead of the prior three tiers.
The new fee structure, subject to ongoing annual adjustments, is set out below:
|
Size (value) of transaction |
Fee |
|
< $161.5 million |
$30,000 |
|
$161.5 to < $500 million |
$100,000 |
|
$500 million to < $1 billion |
$250,000 |
|
$1 billion to < $2 billion |
$400,000 |
|
$2 billion to < $5 billion |
$800,000 |
|
$5 billion or more |
$2,250,000 |
Interlocking Directorates
Further, taking effect immediately are revised thresholds for interlocking directorates pursuant to Section 8 of the Clayton Act. Pursuant to the revised thresholds, competitor corporations are covered by Section 8 if each one has capital, surplus and undivided profits aggregating more than $45,257,000, with the exception that no corporation is covered if the competitive sales of either corporation are less than $4,525,700.
What This Means for Transactions Preparing for Filings
The question of whether a transaction meets the jurisdictional thresholds for premerger notification under the HSR Act depends on the facts and circumstances in each case. The outcome of that question can have significant consequences for the parties to the transaction. In particular, parties may consider whether filings are still required under the revised thresholds and whether to delay filings to get lower fees for smaller transactions―or parties may attempt to submit premerger notification filings before higher fees take effect for larger transactions or before jurisdiction is removed for smaller transactions where the parties prefer to run the deal by the agencies for premerger clearance. Please note that HSR rules and interpretations address how to measure the size of persons and the size of transaction, and some types of transactions have special size-of-person rules, and additional matters must be considered in analyzing any potential exemptions. Parties considering transactions should pay close attention to the adjusted thresholds.
For More Information
If you have any questions about this Alert, please contact Sean P. McConnell, Edward G. Biester III, Sarah O'Laughlin Kulik, any of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.